Contracts
Terms of Service, also called Terms and Conditions, are click-through terms consumers and businesses sign before they’re able to access a product or service, whether online or for commercial goods. Today, I discuss what they are, common terms, and when a company needs to have them.
A Terms of Service is a contract between a service provider or vendor and its end user, whether an individual consumer or a company, that governs the user’s access and use of a product or service. The product or service may be offered online, such as an app or SaaS platform (think Instagram, Facebook and others), and may also involve commercial, tangible goods (such as eBay). The Terms will describe account creation, payments, usage of the platform (if it’s online), prohibited behavior (such as scraping or hacking), and other provisions such as limitation of liability, indemnification, and governing law.
Terms of Service may appear boilerplate and standard, but they should be custom-written with each specific business in mind. Common provisions appearing in most TOS include account creation, payments (if any fees are charged), and prohibited activity, but many other sections vary widely. An e-commerce company’s Terms of Service will usually have sections on purchasing, payments, and returns and refunds, and thus will look drastically different from a SaaS platform’s Terms of Service, for example. Similarly, websites with only passive content will have even simpler terms covering users’ browsing of the content posted online.
The best way for a company to implement a Terms of Service online is via a click-through process prior to providing the user access to the platform or service. The Terms should also be posted in a publicly accessible part of the website, and businesses often post a link to the Terms in the footer of their sites.
For proper implementation, a user must click an “I Accept” or “Ok” button that displays a link to the online Terms, so that the user has an opportunity to read through the Terms. This signals affirmative consent. Without this clickthrough process, there is no legal contract between the service provider and that user. Consent via usage of the website or platform only, called “browse-wrap” is not sufficient, according to many courts, and should be avoided.
A company should have online Terms posted when they are offering any product or service through their website. This includes consumer websites for purchasing merchandise, online platforms such as Gmail or Instagram, and B2B platforms, such as MailChimp and others.
For B2B SaaS contracts, some companies opt for Terms of Service for certain products and services, and bespoke Customer Agreements for other, upgraded products, in a 2-contract system for their customers. Your commercial attorney can draft a Terms of Service for you as well as advise on when to draft and use a bespoke Customer Agreement, and ensure they work together and integrate seamlessly into your operations.
